Brent oil breaks below $50/barrel, NYMEX also drops
Brent crude oil for July sank $2.41/barrel to $48.38/barrel on May 4, the lowest close since January 14. NYMEX June crude futures also dipped $2.30/barrel on Thursday to settle at $45.52/barrel after touching below $45/barrel during the intra-day sessions. Analysts argue that both are likely to have a largest two-day percentage loss since February 2016 in case the bearish trend continues.
The recent drop in crude oil prices have come after a period of consistent falls that started in March when US stock piles had soared by 8.2 million barrels to reach a record of 528.4 million barrels creating concerns over supply-demand balance. The falls in energy costs accelerated by mid-April when Libya lifted the force majeure on its oil production from Sharara oil field. These factors have recently been accompanied by signs of slowing energy demand in China, the world’s second largest oil consumer, as reflected in the growth of the country’s services sector in April retreating to the slowest level of a year. Analysts also argue that although OPEC’s oil cut decision is likely to be extended in the group’s second meeting that will be held next month, it will be hard to persuade non-OPEC members to concede to the decision of extension.
Meanwhile, global naphtha markets followed suit and spot prices in Asia decreased by around $15/ton week over week to be currently quoted at around $435/ton CFR Japan while spot naphtha prices in Europe declined by around $10/ton on the week to be reported at $425/ton CIF NWE. Similar to the global oil prices, the recent naphtha prices indicate a consistent fall since mid-April, according to the weekly average prices in ChemOrbis Price Wizard.
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